Day: April 30, 2021

Scholarship Money is Available Now, Spread the Word!

One of the biggest challenges the construction industry faced before the pandemic, still exists today. We need to expand efforts to engage the next generation and get young adults excited about this field. More than 40% of construction workers are baby boomers, meaning that most of that 40% will be of retirement age in the next five to seven years. Studies also show that construction workers retire from their field earlier than workers in other industries, largely due to the physical demands of the job. In addition to the generational gap, there is a gender balance gap plaguing the industry, as well. There is a considerable gap between the number of working women and those who choose to work in construction. While women comprise up to 47% of the total US labor workforce, only 9.9% of the construction workforce are women. While there are many issues to address, our Construction Accounting Services team wants you to be aware of vital undergraduate and graduate scholarship funding available through The Associated General Contractors of America (AGC) so you can pass on time-sensitive information to your partners and communities.

As the leading association for the construction industry, AGC represents more than 27,000 firms, including over 6,500 of America’s leading general contractors, and over 9,000 specialty-contracting firms. The AGC Education and Research Foundation offers undergraduate and graduate-level scholarships to students enrolled in ABET or ACCE – accredited construction management or construction-related engineering programs. Over $10 million in scholarships have been awarded to more than 4,000 students attending colleges and universities across the country. The criteria to apply for undergraduate and graduate scholarships outlines the eligibility to apply. A maximum of $2,500 per student per year will be distributed for undergraduate scholarships and may be renewable for up to three years of undergraduate study in construction-related engineering, construction, or a dual degree with construction or construction-related engineering as one part. The Graduate Scholarship recipient(s) will receive $3,750 annually to be used for the duration of the student’s graduate degree program, up to $7,500. Scholarship winners will be notified in March 2022 and award(s) will be announced at the AGC Annual Convention. Applications for 2021 will be accepted until June 1, so it is essential to get the word out to any eligible students as soon as possible.

Many challenges undoubtedly lie ahead as the construction industry struggles to attract and retain the next generation, but it is our hope that by presenting young people with information about financial opportunities, we can help advance the next wave of contractors. AT RBT, we pride ourselves on assisting construction professionals to build the most sustainable businesses you can with our comprehensive services. But beyond the variety of services we perform, we aim to pass along useful, relevant information to help our communities succeed, grow and prosper. As we continue to dedicate time and resources to helping our construction clients achieve success, we look forward to connecting with you and your team.

Trade School Trends

Over a year into the coronavirus crisis, many high school seniors have dramatically changed their expectations about the future. A recent survey of high school students found that the likelihood of attending a four-year school sank nearly 20% in the last eight months — down to 53%, from 71%, according to ECMC Group, a nonprofit aimed at helping student borrowers. Gone are the days that a college degree is the only path to success, and many families across the country are turning to trade schools to develop fulfilling, rewarding, and cost-effective career building.

At the center of a heated issue for several years, is the cost of higher education. Going to college in the U.S. is increasingly unaffordable, leaving millions in debilitating debt. As of 2020, the total student debt in the U.S. amounts to a whopping $1.68 trillion. Prices for undergraduate tuition, fees, room, and board at public colleges and universities rose by 31% from 2007 to 2017. The average annual tuition fees at private universities amounted to $35,380 for the 2018-2019 academic year. Taking into consideration the costs of room and board, the total becomes $48,510 annually. For public colleges and universities, the annual costs of tuition amount to $10,230 per year. With room and board, in-state college students can expect total costs to rise to $21,370, with the cost climbing $10,000 higher for out-of-state college students. Although a college education is certainly still necessary for specific careers, other career paths now require specialized training in technology that bachelor’s programs are typically too broad to address. As the infrastructure, construction, and transportation fields grow, four-year degrees are becoming less of a necessity, according to the Bureau of Labor Statistics. The bureau has projected that between 2014 and 2024, the construction sector will add 790,400 jobs, reaching more than 6.9 million people.

Alternative educational programs can address the issue of declining student engagement. In many states, standard high schools are being replaced by alternative career and technical education (CTE) programs, or trade schools. These programs provide a hands-on learning experience and ease students’ transition into the workforce by providing critical job placement assistance services. Students opting for trade school can choose from a variety of career tracks, from health science, and hospitality, to STEM, and construction. Currently, 77% of high school students participate in CTE programs. Perhaps not surprisingly, trade schools usually have better graduation and job placement numbers when compared to traditional four-year universities. While almost 40% of first-time students at four-year institutions fail to graduate within six years, most trade schools can boast higher completion rates than 40%. Luckily here in the Hudson Valley, we have a plethora of BOCES opportunities stretching from the Capital District including Albany and Troy to Dutchess, Orange, Putman, Rensselaer, Rockland, Ulster, and Westchester Counties. Trade schools have shorter programs that can normally be completed in two years, and many trade schools offer certificate programs that students can complete in less than a year – making this an attractive, time-efficient option for many.

We know that decisions surrounding higher education are extremely personal decisions for each student. Regardless of the path that lies ahead for the next generation of young people, knowledge to unlock the various paths to successful futures is key to creating an adaptable, dynamic New York economy. At RBT, we are committed to keeping education professionals informed of important updates that may impact your financial planning. We extend a no-cost consultation to anyone with further questions or interest in working with our dedicated team of professionals.

Sources: James Martin Center, Bureau of Labor Statistics, Guide2Research, CNBC, NCES

How a Low-Finance Program is Saving NY Manufacturing Companies

Are you interested in improving your company’s competitiveness, modernize your equipment or develop new products – but aren’t quite sure how to fund your expansion? The Linked Deposit Program (LDP) may just be the best-kept secret that you’ve been waiting for. Read on to learn more about how this economic development initiative can be a game-changer for your business this year and help you and your team to undertake exciting projects that will improve your company’s productivity, performance, and competitiveness.

What is the LDP?

The Linked Deposit Program (LDP) helps existing New York State firms obtain reduced-rate financing so they can undertake investments to make borrowing less expensive. Eligible businesses can obtain loans from commercial banks, savings banks, savings and loan associations, farm credit institutions, and the New York Business Development Corporation. Ultimately, the program helps the State to improve business competitiveness, create new jobs, generate overall economic growth, and build opportunities for disadvantaged businesses. Under LDP, eligible businesses can obtain commercial loans at an interest rate that is up to 2 or 3 percentage points lower than the prevailing rate on such loans, making borrowing less expensive.

Why was the LDP created?

In 1994, the State began the LDP to assist and encourage firms, manufacturers, and small businesses to make investments. The economy of New York State, and the nation, is undergoing fundamental change. International competition has dramatically intensified with the adoption of advanced technologies and modern production methods. In many ways, this technological renaissance is eroding the competitive position of NYS manufacturers and other businesses in the global economy, threatening profitability, employment and prospects. Economic change has had a particularly detrimental effect on minority and women-owned businesses, which are generally smaller, younger, and less well-capitalized than other businesses. All this is occurring at a time when small businesses are facing a serious shortage of bank credit, impeding their ability to take on projects to modernize their operations, improve their competitiveness, access new markets, and increase their export trade activities. In 2001, legislation was enacted to lift the sunset date and make the LDP a permanent program.

Eligible Borrowers:

Manufacturing Firms – with 500 or fewer full-time NYS-based employees
Service Businesses – independently owned and operated and not dominant in their field, with 100 or fewer full-time NYS-based employees

To review the extensive list of qualifying projects which may make your company LDP eligible, click here.

How does an applicant apply for an LDP, and how long before an applicant hears back?

The applicant (borrower) must apply for the loan to a participating lender, and the lender will complete and send the LDP application to the Linked Deposit Program Office of Empire State Development (ESD). The application will be approved or rejected within 28 days. (The average LDP approval time is 5 business days.) Keep in mind that the most common problems the Office of ESD encounters with applications are insufficient/incomplete information, no statement of how the project will improve the borrower’s competitiveness, an inadequate “impede” statement, or a missing NYS-45 form.

What lenders (banks) can participate in the LDP?

Commercial banks, savings banks, savings and loan associations, and farm credit institutions that are, or are qualified to become, approved depositories for NYS linked deposit funds. The New York Business Development Corporation (NYBDC) is also an approved lender. Lenders are compensated with a deposit of State funds at comparably reduced rates. LDP currently has 70 participating lenders you can review on ESD’s website, here.

Is there a maximum amount that may be borrowed under the program?

Yes. A borrower’s lifetime maximum is $2 million (including prior deposits). Every single deposit is limited to $2 million, and companies can have multiple deposits totaling up to $2 million outstanding at any time. There is no minimum loan amount.

A vibrant business sector is essential to create economic growth and generate jobs. A 2017 report for the governor and the Legislature showed assistance from the LDP created 253 jobs in 2016 and would retain an additional 268 through at least 2021. Since the program’s inception in 1994, LDP has lowered the interest rate for over 5,680 loans, resulting in $1.93 billion in bank lending and leveraging $4.03 billion in new capital investment by businesses across New York State (as of 2018 data). It is our hope that by sharing this important program with our clients and manufacturing industry professionals, New York’s businesses and the health of New York’s export trade will grow in a positive direction. For more information and instructions on applying, click here. To connect with one of our Manufacturing Service Group Team Members, please schedule an appointment through our website.

Sources: ESD, Assemblyman Will Barclay

Plan Now, Save Later: How ARPA Planning Can Help Rescue Local Economies

As you may recall, our previous Thought Leadership article addressed what local governments can expect from the American Rescue Plan Act which was signed into law in early March. Of the $1.9 trillion in relief funding, the ARPA will provide $350 billion dollars in emergency funding for state, local, territorial, and Tribal governments to remedy the current mismatch between rising costs and falling revenues. The state funding portion is approximately $195 billion, with $25.5 billion distributed equally among the 50 states and the District of Columbia, and the remaining amount distributed according to a formula based on unemployment. The local funding portion is approximately $130 billion, equally divided between cities and counties.

When can you expect financial relief?

Localities will receive the funds in two tranches – the first, after the U.S. Treasury certifies the proceeds to each jurisdiction and the second, one year later. Funding must be spent by the end of the 2024 calendar year. Now that you know these funds are headed your way, what’s the next step? We strongly recommend that now is the critical time for careful consideration, organization, and planning, to reflect on exactly how the ARPA funds can be used to stimulate rescue efforts and lead to economic recovery in your community.

Plan now, save later:

Whenever possible, use dedicated grants and programs, saving ARPA funds for priorities not eligible for federal/state assistance programs.
Whenever practical, costs related to ARPA funding should be spread over the qualifying period (through December 31, 2024) to strengthen budgetary stability.
Carefully consider all other possibilities for the practical use of ARPA funding before committing resources to ensure the best use of the temporary funding.

Critical infrastructure updates are a well-suited use of ARPA funds because it is considered a non-recurring expense that can be targeted to strategically important long-term assets that provide benefits over many years. However, assess any ongoing operating costs that may be associated with a specific project.

Eligible uses of these funds include:

Revenue replacement for the provision of government services to the extent of the reduction in revenue due to the COVID-19 public health emergency, relative to revenues collected in the most recent fiscal year before the emergency
COVID-19 expenditures or negative economic impacts of COVID-19, including assistance to small businesses, households, and hard-hit industries, and economic recovery
Premium pay for essential workers
Investments in water, sewer, and broadband infrastructure

The law contains two restrictions on eligible uses:

States cannot use the funds to directly/indirectly offset tax reductions or delay a tax increase
States and localities are prohibited from depositing funds into any pension fund

Before the COVID-19 pandemic, New York State enjoyed its longest economic expansion on record. However, with the onset of the pandemic, the state lost 1.9 million private-sector jobs in March and April 2020, half of which was recovered by November 2020. While the new law stipulates the allocation process and authorized use of funds, the U.S. Department of the Treasury will be issuing regulations that will provide more detail and guidance, our team will continue to update you as more information becomes available and help you to navigate this financial relief. Since 1969, our governmental clients have depended on RBT CPAs, LLP professionals for assistance with all types of financial issues. We encourage you to contact our team today if you have questions about ARPA, or other questions surrounding the unique factors that impact the government sector.

Sources: GFOA